Boosting sustainable investments in Minas Gerais in the aftermath of the COVID-19 sanitary and economic crisis for a sustainable recovery

This project aimed to build the capacities of Brazil’s Minas Gerais Development Bank (BDMG) in its efforts to finance projects with a positive impact on post-covid 19 economic recovery. This project came together in a context where the pandemic exacerbated short term social and economic tensions, as well as structural environmental and climate tensions. In Brazil, federated states-owned banks played a relevant counter-cyclical role throughout the pandemic. In Minas Gerais (MG), the BDMG was particularly involved in the financing of emergency-response-related sectors and economic recovery policies. 

To that end, the EU invested € 3 175 000 (out of a total of € 74 175 000, together with AFD). The LACIF grant feeded the purpose of providing partial financing, through grants and/or green investment projects to BDMG’s most vulnerable clients and all sectors with the highest climate/environmental and social co-benefits.

The main objective of the project was to facilitate the financing by BDMG of projects with clear climate-related benefits, along with a focus on increasing the bankability of vulnerable projects.

The project was structured around the following components:

I) An investment premium mechanism: Investment grants from the EU targeted specific project leaders, in order to stimulate the financing of the higher social and environmental impact investments. Those investment premiums reduced investment costs for companies developing social and environmental investments and increased thus their bankability.

II) A Technical Assistance supporting BDMG eligible clients. Its main activities included: 

• Pipeline origination
• Implementation of experimental units in selected rural properties located in the chosen regions. 
• Implementation of reference units in each one of the chosen regions for the pilot project. These units served as innovation hubs with an emphasis on the dissemination of sustainable and low-carbon farming techniques and the exchange of experiences
• Capacity building for a local network of technical assistants 
• Development and implementation of monitoring indicators regarding productivity and soil health (biomass, biological activity, organic material and carbon uptake)
• Evaluation
• Communication and visibility